A Practical Guide to CRA Form T661
Form T661 is the CRA's official SR&ED claim document. It's submitted with your T2 corporate return and is the primary record CRA reviewers use to evaluate your claim. Getting it right is essential.
What is Form T661?
Form T661 — SR&ED Expenditures Claim — is filed by any business claiming SR&ED investment tax credits in Canada. It accompanies your T2 corporate income tax return. For corporations, it must be filed within 12 months after the T2 filing due date.
Part 2: The project description narrative
For each qualifying project, you must write a narrative addressing three specific elements. CRA reviewers are trained to look for these — and a vague or incomplete narrative is the most common reason claims are reduced or disallowed.
Technological uncertainty
Explain what was uncertain at the start of the project. You need to describe why achieving the objective was uncertain — what knowledge was missing, why standard approaches couldn't solve it.
Systematic investigation
Describe how your team approached the uncertainty. What experiments did you run? What hypotheses did you test? What did you measure?
Technological advancement
Describe what the work produced in terms of new knowledge. This is distinct from the commercial outcome — what did you learn that advances the general state of knowledge?
Part 3: SR&ED expenditures
Part 3 captures the financial side of your claim. Eligible expenditure categories include:
- Line 300: Salaries and wages of employees performing SR&ED work
- Line 350: Overhead — proxy method (55% of line 300) or traditional method
- Line 360: Materials consumed or transformed during SR&ED experiments
- Line 410: Contract expenditures to arm's-length parties for SR&ED
Common T661 mistakes
- Writing narratives that describe what you built rather than the technical uncertainty you faced
- Missing the filing deadline — there are no extensions
- Including expenditures that cannot be substantiated with financial records
- Describing routine development work as SR&ED without demonstrating uncertainty
- Filing a single project when the work spans multiple distinct technical uncertainties
Common questions
When is Form T661 due?
For corporations, within 12 months after the T2 filing due date (generally 18 months after fiscal year end). Late filing forfeits credits with no exceptions.
Proxy vs. traditional overhead method?
The proxy method calculates overhead as 55% of direct SR&ED labour costs — simple, with no detailed tracking required. The traditional method claims actual overhead directly attributable to SR&ED.
Can we amend a T661 after filing?
Amendments are generally accepted within the original filing window. After that window closes, the claim as filed is final.
Related SR&ED guides
Ready to start?
Prepare your SR&ED claim with AI assistance
sredy.io generates structured, CRA-ready claim packages for a fixed fee. No consultant percentage.